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Monday, June 26, 2017

The government is reportedly in grave difficulties over the agreement
SriLankan Airlines has signed with Airbus ASA to produce and import four
A 350-900 aircraft.

That came to light after a proposal was tabled to the cabinet recently to cancel the agreement.

Government sources say state enterprise development minister Kabir
Hashim submitted the proposal, seeking approval for a cancellation or
any other measure with regard to the agreement.

However, the government is unable to take a decision due to the manner
the agreement was signed during the Rajapaksa regime, and also Airbus
ASA’s refusal to cancel the agreement.

It was signed on 28.06.2013, and the first to aircraft will be delivered
in the second quarter of 2020, and the fourth in the final quarter of
2021.

The advance payments began to be made in 2013 itself, and the final
payment is due in December 2018. So far, the SriLankan has paid
19,214,638.45 dollars to Airbus ASA, out of a total payment of
222,356,600.85 dollars.

However, with the cabinet decision taken on 24 June 2015 to restructure
the national carrier, its fleet will be reduced in number, with
suggestions to delay, renegotiate or cancel the A 350-900 purchases.

Discussions began in November last year to cancel the agreement, but
Airbus ASA has refused to cancel it altogether. Also, the advance
payments were suspended from November 2016, with 679,463.61 dollars
outstanding. Airbus ASA has sent reminders about the advance payments,
and it is likely to seek court redress over a violation of the
agreement.

According to the attorney general’s recommendations, the government has
to take a policy decision to cancel the deal. Airbus ASA has refused to
discuss the matter until a presidential commission and the CID complete
their investigations into the agreement. The total expense to be
incurred in the event of a cancellation is yet to be estimated. Any
measure to be taken needs careful consideration, and should be carried
out in a transparent manner, as underhand deals are possible, the
sources say.